Perhaps excluding the likes of Amazon, Google, and Tesla, most well run, and effective businesses can achieve 10, 15, 20% or more sustainable improvement every couple of years by applying “Fresh Eyes” to their procedures and processes.

Your business is doing well, at least you think so. But you know it would do better if only you could just … [put your challenges and opportunities here] You say ‘I’ll jump on doing that next week, or after the vacation, or after Labor Day or by the end of the year.’ Sorry, buddy. Ain’t happenin’. You said the same last year and the year before and…

Let’s be honest you can’t see the opportunities and obstacles, and if you do, you cannot act on them. The excuses your staff and you have created to avoid doing what must be done have been internalized and are no longer even noticed. Processes that were in place and working have fallen by the wayside. You step over great opportunities sitting on your front step every morning, without even noticing them anymore or worse, curse them for being in your way.

We are blind to missed opportunities and obstacles because we are too close. In the past twenty-five years, I went from 175 to 200 pounds. I did not see even one of those pounds sneak up on me, but they are here today. Your business is the same, slowly getting fat, but not noticed.

‘Well, I’ll just have my staff take a look and make changes.’ Sorry, they have worse baggage than you.

What we’ve done at my company for many years now is to hire a temporary set of “Fresh Eyes.” This person must be a potential superstar, who is available to work for a couple of, or a few months. They are never hired to fill a current role.

Rather the “Fresh Eyes” position is to question everything we do. You know how it is easier to tell someone how they should run their business or their life than to do the same yourself. That is what we are looking for in a “Fresh Eyes” person.

Typically we hire people outside of the rental industry, so they have a different perspective than us. We’ve had a former Health Department inspector, a former Alderman, a couple of former community leaders, a former manager of a temp service. I lean towards people different than us, but who have proven themselves as leaders and producers.

The goal is to hit a sustainable 15% improvement with a two to four-month commitment to work with the “Fresh Eyes” employee.

To get value full value from this experience, you must remember that “Ego is the Enemy”* and do not allow yourself to feel insulted or defensive of your soon to be former bad ways.
——
*Ego is the Enemy is the title of a book on Stoicism by Ryan Holiday – It is worth the read. Find it on Amazon.

While Stampler may or may not be a good or bad landlord[1], the problem with this type of reporting is it stigmatizes everyone who is in this very tough business. And it is a hard business. Many a well-funded nonprofit has failed trying to provide housing in lower income markets

So the Baird investment banker takes a public shaming that may be career-ending. An NBA star receives a public shaming that could potentially have forced him out of the league. An alderman takes a public shaming.

This relentless negative press on the industry creates a fear within those of slightly lesser means that if things go even a bit wrong, they will be publicly attacked. What a disincentive for those with adequate resources to invest in the poorer neighborhoods of the city, creating an environment that allows and perhaps even encourages predatory owners into the market due to the vacuum created by the of others unwillingness of others to take the chance.

[1] Stampler responded to the reporter “Put it this way, when she moved into that property it wasn’t like that, okay,”

If the house had rodent problems, broken windows, defective detectors and damaged light fixtures when the tenant moved in shame on Stampler. If the tenant did the damage and lived in a way that contributed to infestations and then blamed Stampler in an attempt to ruin his career, then shame on her.

The home on N 22nd is a single family. If the infestation was not present when she moved in, then the responsibility was that of the tenant under both state statutes, §704.07(3)(a), and Milwaukee ordinances 275-82-3-b. The woman was a landlord herself prior to a handful of foreclosures in 2010.

DNS orders are not always what they appear to be. A defective detector often is one that the tenant simply took the batteries out of. A handrail violation? Many times DNS orders retrofitting of rails to newer standards, contrary to the codes. In DNS terms a defective roof could be an entire failed roof or a single missing tab.

Prior to 1986 Milwaukee’s code and building inspection held tenants responsible for things like removing batteries from detectors, housekeeping and the damage they did. In 1986, File Number 85-1396-a, the Council decided that tenant responsibility was a bad thing. The only recourse owners have now is an eviction or small claims judgments. Judgments on uncollectible defendants are worthless.

Evictions are expensive, and the results are not satisfying despite what the author of Evicted may purport. Not holding tenants accountable for their actions contributes to the decline in housing and neighborhood disorder.

We must return to a system where all parties are responsible for their acts and omissions, not just the landlord.

M.C.O. 275-82-3

b. Occupant’s Responsibility. Every occupant of a structure containing a single occupancy shall be responsible for the extermination of any insects, rodents or other pests on the premises. Every occupant of a structure containing more than one occupancy shall be responsible for extermination within the occupancy whenever the occupancy is the only one infested. Whenever infestation is caused by failure of the owner to maintain a structure in a reasonably rodent-proof or reasonably insect-proof condition, extermination shall be the responsibility of the owner.

Wis. Stats. §704.07

(3) Duty of tenant.

(a) If the premises are damaged, including by an infestation of insects or other pests, due to the acts or inaction of the tenant, the landlord may elect to allow the tenant to remediate or repair the damage and restore the appearance of the premises by redecorating. However, the landlord may elect to undertake the remediation, repair, or redecoration, and in such case the tenant must reimburse the landlord for the reasonable cost thereof; the cost to the landlord is presumed reasonable unless proved otherwise by the tenant.

Rental Housing is the largest small business in Milwaukee with over $7 billion invested in Milwaukee. (MPROP assessor records October 2015) Rental properties account for well over a half billion dollars a year of economic impact, starting with $190 million in property taxes, sewer and water charges, maintenance, insurance and everything else that goes into running rental housing. The Census Bureau found the yearly median operating costs per unit for multifamily rental properties vary between $3,600 per unit for small properties and $5,170 per unit for large properties, adjusted to 2016 dollars. These numbers exclude interest and mortgage servicing.

Providing rental housing in older, poorer neighborhoods is difficult, challenging and unappreciated work. Many have failed, some are opportunists or worse, but the majority were simply overwhelmed financially and mentally by the task at hand.

Owners are impacted by the financial and social problems of their tenants, the high costs of maintenance and lack of capital to address those problems. It is not the owner’s lifestyle that contributes to insect infestations or broken windows, yet it is the owner and not the occupant that is accountable both financially and recently in the media.

Not only do private owners suffer these burdens. One only needs to look at the long history of failure among Milwaukee’s nonprofit housing providers. (see excerpt below) These groups had every advantage over the small private investor. They had significant financial resources, typically through Block Grant and other government funding and grants; they had well-paid and well-educated staff; they often obtaining properties without costs, and they had access to the best tenants on Rent Assistance. Nearly all of Milwaukee’s nonprofit housing providers failed financially.

These groups had every advantage over the small private investor. They had significant financial resources, typically through Block Grant and other government funding and grants; they had well-paid and well-educated staff; they often obtaining properties without costs, and they had access to the best tenants on Rent Assistance. Nearly all of Milwaukee’s nonprofit housing providers failed financially.

Or one could look at the Milwaukee’s Housing Authority budget to see the costs they incur housing low-income Milwaukeeans. Here too is an organization that gets Rent Assistance tenants, tenants who risk losing their housing subsidy if they fail to comply with the rules or pay their rent. HACM does not rent to the populations with bad histories, leaving the segment most in need of housing to the private sector.

Milwaukee should strive to encourage a successful private rental housing market in this once great city, but since the mid-1980s’ the city adopted a culture of hatred towards private rental owners. That has not produced positive results, but instead, discourages the right people from participating.

If Milwaukee rental housing became more sustainable, where people willing to invest their time and money were to make reasonable profits, it would be harder for the few charlatans to exist because of increased competition for available properties. An added benefit is more interest in investing in Milwaukee’s rental housing will result in an increase in values and therefore an increase in the tax base.

Alderman Witkowski, who is the co-author of this proposal, created a Local Business Action Team to help small business succeed. Rental housing is the largest segment of small business within the city and one that may have the greatest impact on the well-being of the city. With our half billion dollars a year of economic impact, a similar effort should be undertaken towards making private rental housing more successful.

Let’s look at the recent Journal Sentinel series on landlords.

This investigative reporting – using easily available public records – showed that the individual owners behind LLCs could be revealed and that other properties owned by these individuals or different LLCs could also be exposed. Changes in the LLC laws are not necessary, contrary to the assertions of Aldermen Murphy and Witkowski that bad landlords are operating in secret. The City Attorney’s office has recently been successful in having a receiver appointed for the various ownership entities used by inner city landlord

Within existing laws, the city could have caused most of the featured landlords out of business, through docketing and enforcing code enforcement fines, and foreclosing f tax delinquencies. For whatever reason the city allowed these owners to continue unabated.

Perhaps most troubling is the relentless attack on James H. Herrick, who works for Baird, that went as far as the Mayor calling for the guy to be fired. He is not a member of the Association nor known to us.

The Journal reports that inspectors show up and find basement doors illegally padlocked. In the article, the owner’s manager states he did this in an attempt to keep drug dealers from entering the property.

There is no argument that inoperable fire doors are an unreasonable risk to occupants. Clearly, this was a novice mistake made by someone who did not understand fire codes.

The correct response by DNS would be for the inspector to explain the problem and demand the owner’s rep immediately remove the padlocks. If the owner did not comply, the Department of Neighborhood Services has an essential services program where the city can contract a repair and then bill the owner.

Instead, the inspection supervisor chose to placard the building and force 50 families out onto the street. Closing a 50 unit building would not have been the DNS response had the property been located on the Eastside, Bayview or the Southwest side. In these more affluent neighborhood they would have compelled a solution that kept the tenants safely in their homes.

But this building is in a poor, minority neighborhood. The city’s response was harsh as it typically is in these neighborhoods. The DNS employees who acted out of spite towards the owners and a disregard of the tenant population, instead of attempting to protect the homes of 50 low income, primarily minority tenants, should lose their jobs.

The 50 unit building remained closed for a couple of months. It is no surprise that the building ended in foreclosure and sold at a distressed price due to this.

The owner’ use of single property LLCs, in this case, were an advantage to the city. Because the owner had his properties in separate LLCs, this allowed only this one to be foreclosed upon, instead of all 13.

Similarly, what did the city gain by the public attack on NBA basketball star Devin Harris? While it may have been expedient in causing the payment of some fines and taxes, overall it sent a clear warning to others with capital “Do not invest in Milwaukee. If you fail, you will be ridiculed and perhaps lose your career.” Similar results could have been obtained with a private conversation with Harris, thereby not discouraging outside investment.￼
￼

West End joins a list of other nonprofit housing organizations that have failed in the last 10 years, including Walker’s Point Development Corp., East Side Housing Action Coalition and Community Development, and the Westside Conservation Corp.

To be successful at landlording you must approach it as a business. No better way to be innovative than to liberally steal ideas, grabbing the best from other industries and repurposing them for ours. I also have been thinking a lot about starting an incubator for physical businesses in Milwaukee that employee people that have a hard time finding good jobs.

Good artists copy, great artists steal. — Pablo Picasso

This past Saturday John Lee Dumas, who does the podcast “Entrepreneur on Fire” was speaking at the inaugural Young Entrepreneur Convention in Des Moines. If you have heard his podcast you know how great they are. If you haven’t, go take a listen. His format is doing an interview a day with a different entrepreneur, seven days a week. He is an ex-tank commander in the Middle Eastern wars, turned successful podcaster and author.

I find such valuable insights in his stuff that I decided to go to Iowa to see him in person. I did not even look at who the other speakers were. After hearing him speak, if the Young Entrepreneur Convention been JLD alone, the trip would have been worth it.

I was pleasantly surprised at the quality of every one of the presenters.

Kevin Harrington and Carmen Ballering at the Young Entrepreneur Convention

Probably the best known was Kevin Harrington, one of the original Sharks from Shark Tank.

His interesting story: He got his start after seeing a knife pitchman at a county fair and noticing that the Discovery Channel was dark six hours a day in the early days of cable. This was the beginning of “As Seen On TV” and the entire infomercial craze.

Carmen spoke to Kevin Harrington off stage about doing a promo for the Event Decorating Academy. I think what he offered is a valid idea to try.

The other surprising presenter was Jeff Hoffman, founder of PriceLine.com, the company that brought low-cost easy travel to the masses as well as the creator of the airport ticketing kiosk. There was some irony in seeing him Saturday and then having a terrible experience with American Airlines on the way home the next day. His interesting story: He got kicked out of Yale for not having the complete tuition. He solved it by creating a B2B software company even though he could not program himself at the time.

Jeff Hoffman, founder of Priceline, with Carmen Ballering

Two big take aways from Jeff Hoffman: Create BIG goals, envision that you have achieved them and then work backward each step until you are where you are today. That is how he arrived at doing concerts with Elton John, Britney Spears, and NSYNC. He also has produced a profitable indie movie.

The other, which is a to our businesses, is to look at what is occurring outside of your industry and see what opportunities presents themselves. PriceLine.com was based on his reading articles on perishable goods, distressed inventory, and spot pricing.

As I wrote earlier, every presenter was great.

The guy that put the event together was Brandon T Adams. He had created the (3rd?) largest Kickstarter campaigns and is a 2012 Iowa State University grad.

Two of the presenters are from Madison. Megan Watt ,who just released her first book, is a leadership trainer at her company, Dream Catalyst Labs. I paged through the book after hearing her presentation and bought it. The other is Jenna Atkinson, who gave a great presentation on marketing and social media.

Center, Ken Shamrock, “The most dangerous man in the world”, Carmen Ballering, who may just be the most dangerous woman in the world, and Tim Ballering

One that we did see that I did not see a tie into our businesses but was cool to meet as our son-in-law and his brother are both MMA fighters, in fact, Monday of last week the brother, Kevin Vazquez, had his first major UFC fight was Ken Shamrock “The World’s Most Dangerous Man”. Shamrock and his partner were pitching a project to team retiring celebrities with young entrepreneurs.

Disclaimer

I am "just a landlord," NOT an attorney or accountant. If you need legal advice, tax advice or have appendicitis, don’t rely on something you read on the internet and do it yourself. Rather, hire a competent professional.